The Israel Securities Authority (ISA) has decided to intervene in the Rogosin Enterprises bonds affair and has initiated an investigation into the propriety of the activities of the bonds' trustee, the Investec trust company, in the matter.

In an urgent letter that the ISA sent to Investec, the authority draws the trust company's attention to Rogosin's past announcements and to sections in the Securities Law that specify a trustee's obligation, giving Investec 48 hours to reply to the questions it poses in the letter.

For example, Yehuda Algarisi, deputy director of the ISA's Department of Accounting and Reporting, asks what steps the trust company took to prevent a substantive violation of the bonds' terms. Investec is also asked whether it considered the possibility of intervening in the transfer of control in the company because the transfer occurred on the eve of the deadline for the first repayment of the bond.

Additionally, the ISA wants to know what Investec has done and what it intends to do on behalf of the bondholders.

"Did you monitor the company's liquidity during the relevant period?" the ISA inquires in the letter. "And how did you satisfy yourselves that the bond issuer's commitment would be met in accordance with the deed of trust's terms?" it asks.

The chief executive officer of Investec, Iris Slavin, said yesterday that her reply to the ISA would be forwarded this morning. According to Slavin, the trust company acted properly, noting that all those who had followed this affair over the past months were aware of this fact. She pointed out that Investec operated in accordance with the decisions the bondholders made in the three meetings they had already had.

The bondholders are continuing their battle against Rogosin, which has informed them that it is unable to make its first repayment of NIS 18 million (which was to be the first of four repayments). The Leumi Pia mutual funds management company yesterday sent an urgent letter to Investec, demanding that the trust company seek an injunction against the activities of the company's new board of directors with regard to Rogosin's assets and its bank account.

The bondholders are afraid that the company's new major shareholders, led by Yohai Schneider, will transfer the some NIS10 million remaining in the company's till, as well as other assets, and that they will diminish even more drastically the resources at Rogosin's disposal for repaying the loan.

Thus, Leumi Pia is demanding that the trustee turn to the courts and obtain an injunction to prevent such actions. Apparently, the trustee has rejected Leumi Pia's demand. According to the bondholders, NIS 33 million, which were in the company's possession in early January, have been spent on "unworthy causes," although the company's administrators were aware of the company's financial debt to the bondholders.

While Schneider himself has already returned to the United States, his two representatives, his American lawyer and his cousin Safi Shalgi, met yesterday with several major bondholders who had agreed to hold a meeting with these two representatives.

Other bondholders, such as Leumi Pia and Altschuler Shaham, are not prepared to meet with Schneider and his representatives prior to the appointment of a receiver or prior to the company's forwarding of the first repayment.

At the meeting, Schneider's representatives presented the terms of the deal for Rogosin's acquisition and explained that they would need a month to learn about the company and to formulate a proposal that they could bring to the bondholders.

The representatives believe that their opposition to the appointment of a receiver on Sunday will lead the court to grant the company's new controlling shareholders the extension they require.

Leumi Pia CEO Michael Civier has said that the receiver appointed on Sunday will liquidate assets in order to repay the loan. "First of all, they must make the first repayment, the deadline for which was last Sunday," Civier said. "Then we will be prepared to talk." He noted that today it would be decided which lawyer would represent the bondholders during the process and would be appointed receiver. He pointed out that three law firms - Segev, Gornitsky and Yori Nehushtan - have been nominated for this role.

Civier added that once a receiver was appointed, it would become clear that the shareholders, and not just the bondholders, had a stake in this affair. "When the new situation is in place," he added, "perhaps the shareholders will be prepared to pay the price needed to prevent any undermining of their assets."

Major players in this sector are saying that Ezra Harel may want to avoid an investigation into deals that the company has carried out in recent years and that he will, in the end, decide to make at least the first repayment.

On this issue, Civier has stated that Leumi Pia has received information hinting at the possibility of illegal action related to the purchase of the Rostock Port in Germany and to additional deals Rogosin and its major shareholders have cut.

One bondholder said yesterday that the fact that Harel was ready to grant Rogosin a NIS 18 million loan even though he was no longer a major shareholder in the company was proof that he was afraid of an investigation and that he wanted to close the book on the affair.

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